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November 2005
from the Department of Stewardship
A New and Time-Limited “Best Way” to Make Gifts
The Katrina Tax Relief Bill signed by President Bush on September 23 provides an advantageous way
for generous people to make charitable gifts. For the rest of 2005, we may make tax-free charita-
ble cash gifts out of our IRA, 401(k), or 403(b) retirements plan.
Why is this noteworthy? Up to now, if you wished to make a gift to the church or other charity
from your qualified retirement plan, the withdrawal counted as adding to your annual taxable in-
come, and any off-setting charitable deduction was subject to income restrictions. Now—from the
present until December 31—these restrictions are lifted.
Furthermore, if we try to pass on to our children the money in our IRA, 401(k), or 403(b) plan, they
will have to pay income tax when they inherit it. But, if we use the funds to make a gift to the
church or other charity during the rest of 2005, there will be no tax on the funds if they are with-
drawn and donated in cash before December 31. For many, this may be a great opportunity.
If your retirement funds are quite meager, it may not be a good idea. But, for those whose retire-
ment plans provide one of their largest assets, this may be a splendid way to make your charitable
gifts.
For example, a donor with a sizeable IRA, 401(k), or 403(b) may wish to consider making a gift from
their plan during 2005 to:
Pre-pay their 2006 annual pledge.
Pay early and in full an outstanding multi-year pledge to a capital campaign.
Make a special gift for a special purpose.
Establish an endowment fund to immediately begin perpetual support of an important ministry.
If you are over the age of 70 ½ and are already taking annual minimum required distributions from
your plan, you may make a gift to charity of this entire distribution and pay no tax on it. Terrific!
Before making any significant financial moves, particularly if this has tax implications, it is prudent
to consult with a professional tax or financial advisor who is familiar with your personal circum-
stances. Ask your advisor if making a gift out of your retirement plan may not be a “best way” for
you to make a gift during this last quarter of 2005.
Questions? Go to www.EpiscopalGift.org or call your Gift Planning Office at (415) 869-7812. We
will be glad to assist you and to empower your generosity.
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